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Apple spends just a fraction of what Microsoft does on acquisitions and R&D, yet it now has a higher market capitalization because it gives users what they want.

In the past decade, Microsoft has acquired nearly 10 times as many companies as Apple, and spent nearly nine times as many dollars on research and development.

Yet Microsoft's stock price performance has stagnated these last 10 years, while Apple has soared to its current status as the world's most valuable tech firm, a title wrenched away from Microsoft just last week.

Dow Jones investment banker Sameer Bhatia says Apple has succeeded where Microsoft has not by focusing obsessively on user-friendliness. While Microsoft trots out new versions of Windows, Apple has found new tech markets to dominate by creating the iPod, iPhone and iPad, he notes.

Based on willingness to spend money, it would seem that Microsoft should be the more innovative company of the two. Microsoft made 104 acquisitions compared with Apple's 11 in the past decade, while spending $71 billion on research and development, compared with Apple's $8 billion. Dow Jones compiled these numbers from the Capital IQ database.

But buying new companies and pouring money into R&D is not the same thing as innovating, Bhatia said in an interview with Network World, and in a blog post for the Wall Street Journal.

"If a company focuses on the user needs and user interaction, that's more important than having loads of cash and capital, and doing mergers and acquisitions," Bhatia said in the interview.

Apple's secret is not making huge investments to keep up with competitors, but in "identifying and satisfying unmet customer needs," Bhatia wrote in his blog. As a result, Apple's stock price has risen 10-fold in the last decade even as the Nasdaq lost 56% of its value, he writes.

It was May 26 when Apple topped Microsoft with a market cap of $223 billion, higher than Microsoft's market cap of $219.3 billion.

Few tech companies are even close to these titans when it comes to market cap. According to the Financial Times' most recent Global 500 report, released March 31, IBM's market value was $167 billion, AT&T was $153 billion, Cisco checked in at $149 billion and Google at $139 billion.

Being the most valuable tech company in the world isn't necessarily a good thing, Bhatia said. "The risk is greater to Apple, frankly," he said. "Once the hubris starts catching up to management is when the downfall happens. From an end user perspective, it's irrelevant."

But if Apple continues its current momentum it will be difficult for Microsoft to catch up, he said.

Microsoft has long dominated the tech market because of its success in creating software for the workplace. "Business users were the first ones to get computers," and their familiarity with Windows led to success in the home PC market as well, Bhatia said.

But Apple has lured consumers with intuitive, easy-to-use products, such as Macs and iPhones, and now consumers are bringing those devices into the workplace. While "most tech companies are focused on how many features you can pack into a device," Apple executives seem to be proud of the features their products lack, Bhatia said.

Apple executives took their time in delivering multi-tasking to the iPhone, saying they didn't want to sacrifice battery life.

Apple's approach to using the Web on iPhones and iPads has been compared by some to AOL's failed "walled garden," which isolated users from much of the Internet.

But Apple's closed systems have proven to be relatively secure, and so far iPhone and iPad users enjoy using their "apps," rather than a Web browser, to check weather, directions and other information, Bhatia said.

When it comes to the Mac, the proliferation of Web services plays right into Apple's hands. Many home users are switching to Macs and pushing IT departments to adapt. Switching from Windows to a Mac in the corporate setting can be quite difficult, because various software applications, middleware, ERP systems and so forth are compatible only with Windows.

But the proliferation of cloud computing is putting more business services onto the browser, rather than in the data center, making it easier for businesses to let users choose their own devices, Bhatia says.

In general, Apple has succeeded not by inventing entirely new technologies but taking available technologies and packaging them in a way that's useful to consumers.

"Apple's obsessive focus on user experience is the horse that pulls the technological cart," Bhatia writes. "Customers could not easily download and store music before the iPod, or easily access the Web on a mobile device before the iPhone. Apple saw that, and delivered these experiences first — even though it invented neither digital music files nor mobile browsers."

Apple's lesson for CEOs of tech firms is that "M&A and capital allocation decisions should not just be driven by changes in the competitive or technological landscapes," Bhatia said. "Companies that focus on what the latest technology can do, and who owns that technology, will always be playing catch-up. Instead, think about what customers would like to do, but can't do yet. Then invest to meet that need."